Let’s celebrate a win for councils

Ministers are finally listening to local government and last week’s Budget represented a series of strategic victories for the sector, says James Maker of the County Councils Network.

At the start of October, the County Councils Network chair Paul Carter remarked that the local government sector was feeling ‘unloved’.

His comment is important context for any post-Budget analysis on the impact of the announcements on the sector.

Fast forward a month, and amongst counties at least, this Budget’s announcements have improved the mood.

Some have branded the announcements ‘sticking plasters’. This is understandable, to a degree.

After eight years of grant reductions for local authorities, and with future funding uncertain, no-one should be under the impression this is a long-term solution.

But would many have predicted that during October an extra £240m for social care winter pressures would be announced, with the Budget providing a further £1bn of new revenue resources, and of course, the lifting of the housing borrowing cap?

Despite all our best efforts, local government has been crowded out of the debate over the last few years when it comes to public service spending, unable to compete with the emotional pull of the NHS or the police forces.

Over the summer, CCN ramped up the pressure in its lobbying and we knew the network’s messages were making inroads behind closed doors.

Even with this, all the senior figures across the sector I spoke to since late September expected little, if anything, from the Budget. If additional resources were to be found, everything pointed towards a tussle at the settlement and what was becoming the now-yearly ritual of last minute parliamentary lobbying early in the new year.

Against this backdrop of minimal expectations, the sector has secured significant funding from the government.

For CCN member councils the social care funding is not insignificant. Nor is the funding for roads, with CCN’s research showing that it is highways, transport and maintenance that were likely to face the biggest cuts over the next two years.

Most telling, however, is the way in which this was secured within Whitehall.

Firstly, my understanding is that the negotiations with Treasury were deeply political. James Brokenshire and his ministers, recognising the severe pressures faced by upper-tier councils, were standing up for local government by lobbying to secure additional funding for councils.

Back in June, CCN advocacy specifically asked for this approach and to break with last-minute parliamentary lobbying; this situation was bad for financial planning and ultimately counterproductive for the relationship between central and local government.

Getting ministers to listen to us and make a proactive case on our behalf shows the need to build on the positive relationships we have forged.

Another telling – and positive - factor in the Budget was the recognition of the pressures in children’s services, with full flexibility expected to be applied to £410m of the funding.

A clear message from our members has been to argue for this type of flexibility with any additional funding, allowing councils to use resources according to local circumstances. I understand this flexibility was specifically requested by ministers within the Ministry of Housing, Communities, and Local Government; another important sign that they are listening.

While this flexibility will clearly not meet all the short-term funding pressures in children’s services, it does at least show this area is finally on the Treasury’s radar.

Projected demand shows no sign of abating. CCN has illustrated that counties faced a £3.2bn funding gap by 2020, largely due to costs outside our member councils’ control. This week’s announcement will go some way to filling that gap, but it won’t stop all the difficult decisions.

Looking further ahead the Institute for Fiscal Studies showed last week the chancellor’s projections for the Spending Review funding envelope coupled with a ‘good’ Brexit deal will still leave most departments other that the NHS with a flat-cash settlement.

It is therefore important that we are realistic and practical in our Spending Review asks; putting forward our central pitch for a significant, real-terms increase in funding, but also acknowledging that greater council tax flexibility, new charges, and further financial and service reform will part of an overall package.

The current crop of ministers within the ministry are clearly sympathetic to the sector, but we must continue to present clear and compelling evidence to convince the chancellor of the merit of investing in local government.

CCN is therefore working with PwC on a major new financial analysis to demonstrate, in more detail than before, the financial gap councils face and the factors driving their costs.

Last week’s announcements should be viewed through the prism of what it is: a one-year Budget. To that end, the sector should be commending itself on securing the largest set of wins for many years and positioning itself tactically well for the battles that lie ahead.

2015 Public Finance. Public Finance is published on behalf of the Chartered Institute of Public Finance and Accountancy by Redactive Publishing Ltd. All rights reserved. Reproduction of any part is not allowed without written permission. Redactive, 17-18 Britton Street, London, EC1M 5TP